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9 - Business and Human Rights
Guiding Principles on Business and Human Rights
Overview
Established framework: "Protect, Respect and Remedy"
Developed by the Special Representative of the Secretary-General on human rights and transnational corporations (2011).
Endorsed by the Human Rights Council in resolution 17/4.
I. The State Duty to Protect Human Rights
A. Foundational Principles
States must protect against human rights abuse by third parties, including businesses.
Requires steps to prevent, investigate, punish, and redress abuses through laws and policies.
Standards of conduct mean states aren't automatically liable for third-party abuses, but can be when failing to act.
B. Operational Principles
Clear expectations that all businesses respect human rights in their operations.
Home states should regulate extraterritorial business activities to prevent human rights abuses.
II. The Corporate Responsibility to Respect Human Rights
A. Foundational Principles
All business enterprises should respect human rights and avoid infringing upon them.
Responsibility exists independently of state obligations and compliance with national laws.
Businesses must mitigate adverse human rights impacts and support their respect.
B. Operational Principles
Policy Commitment: Business enterprises should adopt a policy statement committing to respecting human rights.
Human Rights Due Diligence: Assess and manage potential human rights impacts of their operations and relationships.
Remediation Processes: Establish mechanisms for remediation in cases where human rights impacts occur.
III. Access to Remedy
A. Foundational Principle
States must ensure effective remedies for victims of business-related human rights abuses, through various mechanisms.
B. Operational Principles
Judicial Mechanisms: Ensure domestic judicial systems are effective and accessible for those seeking remedy.
Non-Judicial Grievance Mechanisms: Provide effective non-judicial systems for addressing human rights grievances.
Operational-Level Grievance Mechanisms: Businesses should create mechanisms for individuals to raise concerns directly, ensuring early resolution.
Key Terms and Concepts
Human Rights Due Diligence: Ongoing process businesses engage in to understand and address human rights impacts.
Grievance Mechanisms: Processes through which affected individuals can seek remedy for human rights abuses.
Operational Guidance: States and businesses are encouraged to provide appropriate guidance for respecting human rights in practice.
Overview of the Legally Binding Instrument
This instrument regulates activities of transnational corporations and other business enterprises under international human rights law.
Key sections and articles address definitions, rights of victims, legal liability, and international cooperation.
Preamble
Reaffirmation of Key Documents:
UN Charter principles
Nine core International Human Rights Instruments
ILO Conventions and the Universal Declaration of Human Rights.
Commitment to Human Rights Principles:
Universal, indivisible, interdependent human rights.
Obligation of states to protect against abuses by businesses.
Importance of social progress and the promotion of dignity for all individuals.
SECTION I: General Principles
Article 1: Definitions
Victim: Any person harmed by business-related abuses, including family or dependents.
Human Rights Abuse: Harm that impedes enjoyment of recognized rights.
Business Activities: Economic activities including services by corporations, regardless of jurisdiction.
Business Relationship: Interactions between entities conducting business.
Article 2: Statement of Purpose
Clarifies state obligations to uphold human rights in business contexts.
Aims to prevent and address human rights abuses.
Ensures access to justice and just remedies for victims.
Article 3: Scope
Applies to all business activities, especially those of transnational character.
Allows for differentiated obligations based on business size and impact.
SECTION II: Rights and Protections for Victims
Article 4: Rights of Victims
Victims have rights to dignity, safety, privacy, and access to justice.
Guarantees right to various forms of remedy including compensation and rehabilitation.
Article 5: Protection of Victims
States must protect victims from retaliatory actions during legal proceedings.
A safe environment must be guaranteed for human rights defenders.
Article 6: Prevention
States must regulate business activities to prevent abuses.
Companies are required to conduct human rights due diligence proportional to risks.
Article 7: Access to Remedy
Victims must have pathways to justice.
States should provide legal assistance and ensure reasonable court processes.
Article 8: Legal Liability
Establishes a domestic system of accountability for human rights abuses.
Allows for civil and criminal liabilities for businesses.
SECTION III: Implementation and Institutional Arrangements
Article 15: Institutional Arrangements
Establishment of a Committee to monitor implementation.
Committee will consist of 12 to 18 experts on human rights.
Article 16: Implementation
States need to create effective monitoring mechanisms for enforcement.
Promote gender perspectives and protect vulnerable groups in enforcement.
Articles 17-24: Various Provisions
Discuss protocols, dispute settlements, entry into force, and amendments.
Emphasize the importance of international cooperation and the role of the UN.
Confirm the Secretary-General's role as the depositary of this instrument.
Protocols: Establish clear guidelines for monitoring compliance and ensuring accountability among businesses operating in different jurisdictions.
Dispute Settlements: Encourage the development of mechanisms that facilitate fair and effective resolution of disputes arising from business operations that impact human rights.
Entry into Force: Highlight the necessity for timely ratification by member states to ensure that the provisions become operational as intended.
Amendments: Outline procedures for proposing and adopting amendments to adapt to evolving business practices and human rights standards.
Furthermore, it is crucial to recognize that international cooperation is essential in addressing transnational issues related to business and human rights, with the UN playing a pivotal role in fostering dialogue and collaboration among states, businesses, and civil society.
Finally, the Secretary-General serves as the depositary of this instrument, ensuring its proper management and facilitating communication among all stakeholders.
Shell’s Responsibility for Climate Change
Overview
On May 26, 2021, the District Court of The Hague rendered a groundbreaking judgment in the case of Milieudefensie v Royal Dutch Shell.
This marked a significant judicial finding: a multinational corporation can be held accountable for its role in climate change, drawing from aspects of international law.
While Dutch tort law primarily underpinned the judgment, the implications extend far beyond the Netherlands, potentially influencing corporate responsibility globally.
Key Aspects of the Judgment
Facts and Holding
Plaintiffs: Milieudefensie, on behalf of 17,379 individuals and several NGOs, filed a public interest class action.
Class Action Approval: The Court allowed the class action based on the importance of preventing climate change for current and future generations of individuals residing in the Netherlands but rejected claims concerning the global population due to variances in climate impacts.
Defendant: Royal Dutch Shell (RDS) is a UK-based multinational corporation.
Court Findings:
RDS’s carbon emissions exceeded those of many countries, including the Netherlands.
Recognized significant climate-related risks posed to Dutch residents due to CO2 emissions.
The Court ordered RDS to reduce CO2 emissions by 45% by 2030 in accordance with the Shell group's corporate policy.
International Law's Role
While the initial legal basis was Dutch tort law, the Court invoked international human rights obligations indirectly, influencing RDS's responsibilities.
Human Rights Considerations: Due to the fundamental importance of human rights, the Court stated these rights must be considered when interpreting due care standards under Dutch law.
Cited the Urgenda Judgment and noted how the European Convention on Human Rights and the International Covenant on Civil and Political Rights could play a role in corporate accountability.
UN Guiding Principles and the Paris Agreement
The Court referred to the UN Guiding Principles on Business and Human Rights (UNGP) as non-binding soft law but valuable for interpreting due care standards.
RDS was determined to have a 'best efforts' obligation to mitigate emissions and risks along its supply chain.
The Paris Agreement's goals were deemed relevant in setting the CO2 reduction target for RDS, highlighting the need for a 45% reduction as consistent with scientific consensus.
Shared Responsibility Indication
RDS's defense emphasized that climate change is a collective issue requiring societal action; however, the Court underscored that this does not alleviate RDS's obligations.
Acknowledged that while many contribute to climate change, each entity, including RDS, holds independent obligations under international norms.
Conclusion: Implications of the Judgment
The decision by the Dutch court represents a progressive interpretation of corporate responsibility regarding climate change.
It reflects a growing recognition that corporations must conduct their activities following international human rights and environmental standards.
As climate litigation evolves, this case could set precedents for how multinational corporations relate to their emissions and broader responsibilities.
The judgment emphasizes that no actor can evade responsibility, underscoring the concept of shared accountability while maintaining individual obligations.
Abstract
Leading corporations are debating the shift from shareholder primacy to stakeholder governance.
The pathway explored complements stakeholder governance with a focus on human rights due diligence (HRDD).
Human rights due diligence is becoming mandatory, with significant implications for corporate governance.
Conflicts of Interest
John Ruggie has various roles including:
Chair of the Board of Shift, promoting UN Guiding Principles on Business and Human Rights.
Board Member of the Arabesque Group, an ESG data provider.
Involvement with Unilever’s Sustainability Advisory Council.
Caroline Rees and Rachel Davis also hold significant positions within Shift, guiding its strategic focus on human rights.
Introduction
UN initiated an inquiry into business and human rights (BHR) in 2005.
Established the UN Guiding Principles (UNGPs) to clarify corporate responsibilities.
The UNGPs consist of three pillars:
State duty to protect against human rights abuses.
Corporate responsibility to respect human rights.
Victims’ access to effective remedies.
The UNGPs represent a shift from voluntary to more structured expectations on businesses concerning human rights.
Corporate Purpose in Play
Ideological shifts in the 1980s emphasized shareholder primacy, altering corporate governance.
Recent trends show business associations moving towards stakeholder governance due to social and economic shifts.
The Business Roundtable's 2019 statement reflects this shift, advocating for corporate benefits extending to all stakeholders.
The Thought Heard Around the World
Advocates of stakeholder capitalism critique Milton Friedman’s views on corporate responsibility.
Friedman argued that corporations should maximize shareholder profits without addressing societal issues.
This led to structural incentives for corporate leaders that promote short-term gains over long-term viability.
Human Rights Due Diligence (HRDD)
HRDD is a management tool per the UNGPs for companies to respect human rights proactively.
The HRDD process involves:
Identifying and assessing human rights impacts.
Taking action to prevent or mitigate impacts.
Tracking effectiveness of actions.
Communicating responses to stakeholders.
HRDD is distinct from traditional risk management by being ongoing and stakeholder-focused.
The Rise of Mandatory Measures
Growing recognition of HRDD in various jurisdictions as a governance standard.
The French Duty of Vigilance Law (2017):
Requires that large companies disclose due diligence for human rights and environmental impacts.
Sets penalties for non-compliance.
Other jurisdictions, including the Netherlands and Germany, are adopting or considering similar regulations.
Conclusion
The last decade has seen a 'norm cascade' in business and human rights.
HRDD facilitates corporate alignment with human rights expectations and stakeholder governance.
Moves toward mandatory HRDD are preparing the ground for more substantial corporate accountability and stakeholder inclusion in governance.
Rise of Mandatory Human Rights Due Diligence
Concept Overview: Human Rights Due Diligence (HRDD) is a process developed through the work of John Ruggie, aiming to ensure that businesses respect human rights within their operations and supply chains. It is formalized in the UN Guiding Principles on Business and Human Rights (UNGPs).
Current Landscape: Recent legislative proposals in Europe are pushing for mandatory HRDD by companies, reflecting a growing acceptance and a potential legal framework around HRDD, despite differing viewpoints on its implications for legal liability.
Risks: Potential pitfalls include superficial compliance where laws may create a false sense of security without genuine adherence to human rights protections.
Introduction
HRDD as a Buzzword: The term has gained momentum in business and human rights advocacy, seen in civil society campaigns and legislative initiatives aimed at companies across Europe.
Legal Landscape: Some laws propose establishing legal accountability for companies failing to implement HRDD, highlighting a significant shift in accountability expectations toward businesses.
Evolution of HRDD
Historical Context: HRDD evolved from traditional business due diligence aimed at assessing commercial risks to a broader responsibility encompassing human rights.
Development and Acceptance: Initially skeptic, many stakeholders have begun to integrate HRDD into their practices. The framework's acceptance is recognized as largely superficial, with meaningful implementation still in question.
Trends, Controversies, and Risks
A. Trends Toward Legally Mandated HRDD
Legislative Movements: Numerous declarations and initiatives reflect a clear trend toward mandatory HRDD, with EU-wide regulations being discussed as of April 2020.
Implementation Gaps: Despite increasing legislative proposals, the actual implementation by companies remains low, necessitating stronger enforcement mechanisms.
B. Evolution of Concepts Around HRDD
Debates Over Liability: Different stakeholders interpret HRDD variously; some see it as merely a business tool, while others advocate for it to be recognized legally for accountability purposes.
Risk Management vs. Human Rights Protection: Many corporations view HRDD as a method of risk management rather than a genuine commitment to human rights which can dilute the intent behind HRDD.
C. Risks Related to HRDD Approaches
Cosmetic Compliance: There is a risk of pseudo-compliance with HRDD where companies adopt minimalistic operational changes without substantive respect for human rights.
Legalization and Civil Liability
National Examples: Laws like the French Duty of Vigilance create mandatory HRDD obligations tied to civil liabilities for companies, contrasting with other regulatory models across Europe.
Push for Clarity: The need for clear definitions, standards, and consequences within HRDD legislation is emphasized to prevent superficial compliance approaches lacking genuine effectiveness.
Future Considerations for HRDD
A. Enhancing Effectiveness
Focus on Prevention and Accountability: HRDD laws must emphasize robust mechanisms for accountability to prevent human rights abuses effectively.
B. Ongoing Risks and Mitigations
Avoiding Superficial Regulations: Legislation must ensure that efforts don't just create an illusion of progress, maintaining effective accountability that achieves its intended protective outcomes.
C. Importance of Transparency
Strengthened Monitoring: Legislative frameworks should ensure strong independent oversight to monitor compliance and actual outcomes of HRDD processes.
Conclusion
Urgency of Effective Implementation: As the landscape for corporate responsibility evolves, the focus should remain on creating meaningful HRDD laws that drive accountability and truly respect human rights, avoiding pitfalls of hollow legislation that offer no real change.